Reforms to the Mexican oil company Pemex will give it more flexibility in forming partnerships
A bill that was sent to Congress Wednesday will allow Pemex, the state-owned Mexican oil company, to work with private companies. This will ease restrictions imposed by the previous administration.
The bill is expected to be passed by a large margin. Pemex can then enter into exploration and extraction contracts with private companies, after these contracts were canceled by the former president Andres Manuel Obrador.
In August, just before Lopez Obrador’s successor Claudia Sheinbaum assumed office in October of that year, it was reported that Sheinbaum’s government would seek to restart joint ventures with Pemex to increase its reserves and manage mounting debt.
The text sent on Wednesday to Congress lays out what are called "secondary laws" or guidelines to implement the energy reform that was passed last year.
According to the bill, Pemex can request that the energy ministry convert existing service contracts such as the one with Grupo Carso, owned by billionaire Carlos Slim, in the Lakach deepwater gas field into joint ventures or contracts for exploration and extraction.
Reports last week stated that Pemex & Carso discussed major changes to the Project to make it more profitable. The state company had abandoned the project twice before due to high costs.
Pemex won't need to go through a bid process or regulatory approval in order to convert contracts. However, it may face these hurdles when negotiating new deals for exploration and extraction.
According to the bill, the state firm will retain exclusive rights to exploration areas and not be required to invest its own money in joint contracts.
Support for PEMEX
Pemex, one of the largest state oil companies in the world is heavily indebted and does not have the funds to invest in new projects to achieve the crude production targets promised by Sheinbaum during her tenure.
The proposal would allow the Energy Ministry to hold auctions for contracts of exploration and extraction, a practice that Lopez Obrador had previously suspended.
According to the bill Pemex can bid on contracts with "alliances and associations"; the energy ministry will determine Pemex’s stake in a project.
The ability of Pemex to select its partners is also new. The previous oil regulator CNH had assigned them. Now, the energy ministry is taking over their duties. (Reporting and writing by Adriana Barera; editing by Jamie Freed).
(source: Reuters)
